Article regarding sale of Centro NZ properties which form part of MCS20.
Centro selling shopping centres BY COLIN TAYLOR 1,225 words 21 June 2008 New Zealand Herald English (c) 2008 The New Zealand Herald
The four properties, offered separately or together, are in some of NZ's better areas
Four New Zealand shopping centres have been put on the market by Australian retail investor Centro Properties Group, which has an extensive portfolio of shopping centres across Australia, New Zealand and the United States.
Centro is selling its Meadowlands Shopping Plaza and Kelston Shopping Centre properties in Auckland, Barringtons Shopping Centre in Christchurch and the majority portion of the Porirua MegaCentre in Wellington.
The shopping centres are Centro's only assets in New Zealand and are being sold separately, in lots or together by private treaty through Colliers International. Colliers' international sales director John Goddard says it is not often New Zealand has four regional shopping centres from one owner for sale in a market that is short on quality retail investments.
``New Zealand retail complexes have been sought- after assets for portfolios, with shopping centres worth more than $1 billion having been sold to overseas investors in the past three years.''
The four regional shopping centres are in some of New Zealand's better shopping areas.
In Auckland's western suburbs, Kelston Shopping Centre is a significant neighbourhood centre of 7682sq m of gross lettable area on a 21,568sq m site. Anchored by a Progressive Enterprises-owned Foodtown supermarket, the shopping centre has 22 specialty tenancies, four ATM machines and stand-alone McDonald's and Mobil service station on the edge of the site. Centro has a ground lease only over the Mobil land, and the oil company owns all the above-ground improvements.
The retailers are paying more than $2.5 million a year in gross rent for tenancies in the centre, which was built in 1996-1997.
The fully enclosed single level shopping centre has parking for 408 vehicles, including 188 covered basement parks. A short walk leads from the northern car park through the mall to Foodtown. One third of the retailers trade directly on to the carpark. Situated at the corner of Great North Rd and West Coast Rd, the shopping centre is on one of the busiest intersections in Waitakere City and has frontages to bothroads.
Across the city in the eastern suburbs, Meadowlands Shopping Plaza is Centro's most recent New Zealand acquisition. Located midway between Howick and the rapidly expanding Botany Downs and East Tamaki areas, the single-level, fully enclosed, air- conditioned 5362sq m neighbourhood plaza at 112 Whitford Rd, Howick, sits on an 18,860sq m corner site.
The majority of Manukau City's residential growth is immediately to the south of the centre. Manukau is New Zealand's third largest city, home to more than 330,000 people, and is one of the fastest growing parts of the country.
Colliers International corporate sales brokers John Green and Frida Andersson say Meadowlands is a strong performer as it is surrounded by a huge residential catchment that is continually growing.
The plaza, built in 1993 and refurbished in 2000, is anchored by a Woolworths supermarket, another Progressive Enterprises-owned brand. It has 21 specialty shops, two ATM machines, a single-office tenancy and parking for about 288 cars, equating to 5.4 parking spaces for every 100sq m of gross lettable area.
Andersson says the plaza's simple layout provides easy access to and from the carpark and supermarket. ``Six retailers trade directly on to the parking area, highlighting the convenience aspect of the shopping.''
Plaza tenants are paying more than $1.8 million a year in gross rent and leases have a mixture of market, CPI or percentage increases at rent review. A number of tenants contribute to a promotions and marketing fund.
Green says Meadowlands Shopping Plaza and Kelston Shopping Centre offer a potential buyer or buyers a good spread of risk and security of income and tenure underpinned by the leases to Woolworths and Foodtown. ``Both are strong neighbourhood shopping centres on highly visible strategic sites.''
He says Meadowlands has development opportunities through the reconfiguration of the speciality tenancies. ``There could be the possibility of expansion to include a fast food outlet, medical centre or some other related use in part of the existing carpark, or room to explore other options.
Further south at Porirua, near Wellington, Centro is selling the most significant part of Porirua MegaCentre, the biggest bulk retail centre in the region. Situated in the heart of the region's growth spine in terms of population and economic expansion, and 30 seconds off State Highway 1, the 17,977sq m of gross lettable area makes up stages two to four of the five-stage Porirua MegaCentre. The other stages are owned by ING and Harvey Norman.
Built in 1999-2000, the Centro- owned stages of the Porirua MegaCentre are anchored by three major tenants: Briscoes, Noel Leeming and The Warehouse. They also carry 19 specialty retail outlets. All tenancies face into a central open carpark that has spaces for about 695 vehicles.
Colliers' Wellington broker, Chris Gollins, and managing director, Bill Leckie, say the regional topography and a recent Wellington City Council change to its district plan makes further bulk retail growth in the region unlikely. ``There is scant prospect of a competing centre of similar scale anywhere in Wellington,'' says Gollins.
Gollins says the centre offers investors probably the biggest single cluster of top New Zealand retail brands available in an investment of this scale. Tenants are paying more than $3 million a year in net rent. The 19 specialty tenants are the biggest contributors, making up about 60 per cent of the total net return.
In Christchurch, Barringtons Shopping Centre, at 256 Barrington St, Somerfield, is expected to appeal to a buyer who can expand the centre. Sitting on a 35,685sq m site, Colliers International Christchurch managing director Hamish Doig says Barringtons Shopping Centre is ripe for redevelopment. The shopping centre is spread across 11,573sq m of gross lettable area, which is predominantly single-level retail space.
Barringtons Shopping Centre is anchored by a Fresh Choice Supermarket. There are also 50 specialty tenants, an outlet for The Warehouse, six offices and parking for 673 cars, equating to 5.8 parks for every 100sq m of net lettable retail space.
``There is more than enough potential to expand the centre, and Centro lodged an application with the Christchurch City Council to increase the floor area of the exiting mall by extending it toward the Athelstan St road frontage,'' says Doig.
If approval is granted as expected by the end of the month, the consent will allow a new owner to enclose the existing outdoor mall facade and build an extension of 1080sq m of space for up to 10 specialty shops, 857.5sq m of first-floor offices, new common areas of 758sq m on the ground floor and 227sq m on the first floor, as well as relocate the southern pedestrian entrance to the mall's eastern side.
Doig says further value can be added to the mall by subdividing larger areas and achieving a higher rate per square metre in rent over the whole space, continuing to improve the tenancy mix and buying the neighbouring commercial properties along Barrington Street to improve car parking and therefore net operating income.
Goddard says the centres will appeal to investors who can add value.
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